Assessing Your Firm's BD Performance

For most A/E firms, the marketplace has changed dramatically the last three years. But what about your business development process? Has it changed dramatically? If you hope to prosper in the next few (or several) years, it may be time to radically rethink your approach to developing new business.

Why? Because if you're planning to grow your business, you'll probably have to take market share from your competitors. Before the recession, markets were expanding and most A/E firms were growing simply by holding their own. Few firms were actually gaining market share, unless they were doing so by acquisition. That's why old BD approaches are not likely to be adequate to sustain growth for the foreseeable future.

So where to start? Let me suggest an in-depth assessment of your current marketing and sales activities. How effective are they, really? Are you measuring effectiveness and return on investment, or simply overall results such as sales and win rate? Here are a few measures of BD performance to consider:

BD labor. Most selling in our business is done by technical professionals who have other important responsibilities such as managing projects and people. Thus the critical function of developing new business is often relegated to leftover time. To combat this, I advocate specifically budgeting time for BD tasks and managing those tasks like project work. This includes tracking how this time is used, which might involve the following measures:

• BD "utilization." It's one thing to allocate time; it's another to actually spend that time on BD tasks. Given how many other things are competing for your seller-doers' attention, tracking how much of their budgeted time is used is advisable.

• Above the funnel vs. in the funnel. Failing to spend enough effort on prospecting--i.e., identifying new clients and leads--is common among A/E firms. How much time is needed? That depends on your conversion rates: How many "suspects" for every qualified lead, how many leads for every sale. My hunch is that you should be spending 25-35% of your total BD labor working above the funnel, which would include most of your marketing efforts.

• Pre-RFP vs. post-RFP. Many firms spend too much time writing proposals, evidenced in part by their low win rates. Looking at your time spent prior to the RFP (building relationships and positioning your firm) compared to how much is spent after the RFP is one way to assess this. Proposal time probably shouldn't comprise more than 25-35% of your total BD labor.
  

• Marketing vs. proposal labor for BD staff. In most firms, the people who are responsible for marketing also work on proposals. And often, too much of their time is consumed by proposal preparation. Once again, I advocate budgeting time. Determine how much time should be devoted to marketing tasks and take necessary steps to preserve that allocation (see "Taming the Proposal Monster"). Track how well you're sticking to your time budget.

Cost and ROI. The median for total BD costs among A/E firms is about 5-6% of net revenue. But ZweigWhite has found that many highly successful firms spend much more. So while controlling costs makes sense, a more important metric is return on investment. Of course, your largest expenditure is labor, so the above measures are directly related to evaluating your costs. Additionally, you might consider tracking the following:

• BD cost to profit ratio. Historic medians indicate that profit has ranged between two to three times total BD expenditures. I would choose the higher number as a goal. This serves to remind your rainmakers that truly effective business development leads to more profit, not just more revenue.

• Projected proposal cost vs. profit. Obviously, the cost of winning the work should not exceed the expected profit associated with it. Yet I've seen that happen many times, especially on smaller projects. To avoid this, make the cost-to-profit projection part of your go/no go decision process. You'll be better at this if you're tracking actual results over time.

• Individual sales results vs. time spent. If your BD costs seem too high, the first place to look is what you're spending on BD labor. Don't start with your marketing staff, but with your seller-doers and dedicated salespeople. Are you getting a fair return on their efforts? Compare their sales numbers with what you're spending on their business development efforts. Some of my clients have discovered they were making substantial expenditures on sales labor that produced few sales.
  

Evaluating business development ROI also includes the metrics suggested below in breaking out marketing and sales activities.

Marketing activities. At the height of the recession, many A/E firms cut marketing expenditures, including staff positions. In one sense, this seemed foolish when firms needed more business. But the harsh fact is that most firms were hard pressed to demonstrate tangible benefits from their marketing efforts. It's time to change that, for it is certainly possible to measure marketing impact (assuming, of course, that your marketing is effective!). A few examples:

• How many contacts and leads it generates. This most important metric of marketing success is how much interest in your firm it produces. That's measured by how many prospects and clients contact you as a result of your marketing efforts. To enable this, assign a distinct phone number and email address to your marketing materials and activities.

• Web presence. Increasingly firms are moving online with their marketing efforts--website, social media, publications, etc. To gage the relative effectiveness of these activities, consider tracking the following "leading" indicators: Google PageRank, traffic (visitors, followers, Facebook friends), interactions (comments, discussions, messages), mentions (use Google Alerts to track how many times your firm's name is mentioned on the internet).

Sales activities. The bottom line of sales is how much new work you bring in the door. But that doesn't tell the whole story. You can have periodic success generating sales--through long-term clients, add-ons, referrals, etc.--without necessarily being that good at selling. That's precisely what many firms discovered when the recession hit. You have to be better at selling now. To measure that, consider the following metrics:

• Sales conversion rates. How many sales calls result in qualified leads? How many leads result in sales? How many first-time clients become repeat clients? I've not seen any benchmarks in our industry for such metrics, but you want to at least see progress in these rates.

• Proposal win rate. The industry median is reportedly 40%, although most firms I encounter don't do that well. So 40%, at a minimum, should be your goal. But if you aspire to be really good at the proposal game, shoot for 50% or more.

• Proposal conversion rates. Beyond just looking at win rate, it can be enlightening to track two more measures: (1) proposals to shortlist and (2) shortlist to wins. You may find that you are pretty good at getting to the shortlist (say 50%), but not so good at getting from shortlist to contract award (say 25%). That finding enables you to target where improvement is needed.

• Negotiated multiplier or profit. It's gotten harder in several market sectors to maintain the profit expectations of the past. It's wise to target and track profit goals during the sales and negotiation stages. Know in advance when to say no and under what conditions it's okay to make some concessions.

Client relationships. Focusing only on making sales is shortsighted. To build sustained success, you need to strengthen long-term client relationships. So I advise using a few measures of how those relationships are doing:

• Revenue and profit trends. Obviously you want clients who continue to give you new work. But beware of declining profits from long-time clients. Most A/E firms are now tracking financial performance on a per-client basis, but fewer are using these data to guide how they manage these critical relationships.

• Client relationship life cycle. In a previous post, I suggested five stages of client relationships. The recommendation is to assess where in the life cycle you are with each of your clients and determine which ones you want to advance to the next level, and how.

• Characterize your client relationships. In addition to life cycle stages, there are various ways to assess the value of and positioning with your clients. For ideas, I encourage you to check out the white paper "Profits Under Siege" by Harry Mills. This paper has inspired some of my clients to take a harder look at their business development and client management processes, leading to various improvements. In this stumbling recovery, you can't afford to stand pat.

The Power of the Welcome

Best-selling author and consultant Harry Beckwith writes, "In our work, we have found that the first five seconds--the greeting, the welcome, the receptionist's answer--influence customer satisfaction more than any other act. Clients love feeling welcome."

So how's your welcome? In my experience, few firms in our business give much importance to it. Think about it: Who's the lowest paid employee in your office? What's the first position to be filled by a temp when there's an absence or opening in the administrative group? Is it surprising, then, that the person answering the phone often comes across as unfriendly, indifferent, or unfamiliar with the firm and its clients?

Worse still, many firms have substituted recorded messages for a live receptionist. Even the recorded voice usually sounds unfriendly! Then if you don't know the extension of the person you're calling, you're forced to go through the inconvenience of punching in the name on your phone keypad. Finally, you're likely to succeed only in getting through to still another recorded message.

Perhaps you've sidestepped some of this problem by giving your clients your direct phone number. So how's your recorded greeting? Is is the same one your clients have heard for the last year? If the client needs to speak with you immediately, does the message give any indication of your whereabouts or when you might return the call? Or does the client need to transfer to the receptionist only to be told that she doesn't know where you are or when you'll return?

Any of these scenarios hit home? Let me urge you to give serious consideration to upgrading your firm's welcome. It could be one of the most significant steps you will ever take in improving your firm's client service. A few suggestions:

Hire the best receptionist you can afford. It's worth paying extra for a really good one. Your receptionist should be a people person who easily engages in conversation and makes others feel comfortable. This individual not only takes your clients' calls, but should develop a relationship with them, immediately making them feel important when they call.

Make answering the phone a top priority. The receptionist is often loaded up with other responsibilities--especially in a smaller office--so that a ringing phone becomes an unwelcome distraction. Make sure everyone understands that there is no more important administrative task than making clients feel welcome when they call. Don't cause your receptionist to lose sight of that priority by adding too many other duties.

Get rid of the automated receptionist if you have one. While convenient and affordable, these machines are a terrible way to make callers feel welcome. Instead, they send the implicit message: "We don't have time for you." Whatever you are saving in not hiring a receptionist you may well be forfeiting in lost business. Make every effort to have your phone answered by a live person who can deliver a great welcome.

Don't have temps answering the phone. Your client gives his name to the unfamiliar voice on the other end of the line. "Who? Can you spell that?" comes the response. Not a good way to treat a client! If you need to bring in a short-term temporary worker, I would advise assigning that person other duties and moving another of your administrative staff to handle the phone (hopefully someone trained as a substitute receptionist).

Consider eliminating call screening. Screening calls can save you precious time by controlling unwanted interruptions, but it's not a good way to warm your welcome. We've all experienced being screened--making a call, giving your name, and then after being put on hold, being told that the person you are calling is not in, contrary to what the receptionist indicated just moments earlier. Of course, you wouldn't treat your clients that way. But what about the prospective client who calls and is left feeling he or she isn't worthy of your attention? A caller is clearly made to feel more welcome when his or her call is put through without having to pass the "screen test."

Keep your voice mail greeting updated. Your voice mail greeting can say a great deal about your accessibility to clients. If a client needs to talk with you and gets your standard message--"I'm either on the phone or away from my desk"--what does that mean? Are you in the office or not? Will the call be returned in a matter of minutes, hours, or days? Is there someone else who can answer the client's questions? The best practice is to update your greeting daily, with some sense of your whereabouts and how soon you will return the call. If that seems too ambitious, you should at least update it weekly, with a summary of your availability that week. For extended periods away from the office and mobile access, be sure to designate others to respond to your calls from clients.

Always inform the receptionist of your accessibility. Few things can frustrate a client like being told, "I don't know where he is," when the client has an urgent need. When you're out of the office or otherwise unavailable, be sure the receptionist knows about it and how to direct clients seeking to speak with you (e.g., having them talk to a designated back-up or reaching you by another means).

Train all your staff in phone etiquette. It's a good idea to help all employees develop good welcoming skills. Besides answering calls forwarded to their desk, any one of them might answer the phone after hours. Teach them how to project a positive image over the phone, as well as the mechanics of forwarding calls.

Give attention to how your office impacts visitors. Imagine yourself in the place of a client visiting your office. What kind of impression do you think the client will take away from that experience? Does the receptionist offer a warm, friendly greeting? Is the receptionist anywhere to be found? What kind of immediate impression does your lobby convey? What about the rest of your office? Assess what improvements need to be made to make a client's visit more positive.

Finally, in considering how to strengthen your welcome, it's worth mentioning the importance of first impressions. The research consistently indicates that those initial impressions do tend to be lasting, for good or bad. The old statement is true and deserves your attention: "You never get a second chance to make a good first impression." So how's your welcome?

For Maximum Impact, Plan Your Sales Calls

I had been in a rainmaker role for several years before someone challenged me with a simple piece of advice: Always plan your sales calls. Like some of you, I was pretty good at winging it. With little forethought, I could come up with effective questions, carry a conversation, offer sound advice.

But how good I might have been wasn't really the issue; it was a question of how good I could be. The opportunities for improvement were readily evident--great questions I thought of only afterward, key information I realized later I still lacked, no established basis for the next call on that client. Sound familiar? Perhaps you too would do well to better plan your sales calls.

At a rudimentary level, every sales call involves just two primary activities: (1) asking questions and (2) providing help and advice. Notice I didn't include "selling." That will mostly take care of itself if you do the two primary activities well. This focus also provides a simple framework for planning your sales meetings, as illustrated below:

Identify information gaps. A good starting place is to inventory what you know about the sales opportunity and what you don't. Identify information gaps by making a list of everything that is important or helpful to know and then taking note of what gaps remain.

Early in the sales process, of course, the list of information gaps will be lengthy, more than you can address in a single sales call. So the next step is to prioritize what information you'd like to collect in the upcoming meeting with the client.

Plan your questions. With gaps identified, you're ready to consider what questions to ask. To do this well, you don't merely work off your list of missing information. Research demonstrates that how you ask questions matters, both in the wording and the sequencing of the questions.

This was the core theme of the classic book SPIN Selling, which was based on probably the most extensive research into sales techniques that has been done. I've modified that book's approach and created the "Question Progression," which you can read about in this post.

The purpose of the Question Progression isn't to create a script. Rather it's a general framework of questioning to fit within the flow of the conversation. But there's no doubt, in my experience, that planning questions substantially helps you uncover the information and insights you need, not to mention advancing the sales process in the direction you want.

Develop your entrée Your "entrée" is a fair exchange of value for the client's precious time. Typically this involves sharing information and advice that helps the client address a pressing need or problem. Consultant Charles Green calls this "samples selling," basically giving the client a small portion of the consulting and problem solving ability you hope he can be persuaded to hire you for.

This is the counterbalance to soliciting information from the client. It's sharing something of value in return. You should identify your entrée even before making the appointment, as it will, ideally, serve as the motivation for the client wanting to meet with you. In planning your sales call, you are now developing how you intend to share the information and advice you promised.

Obviously, asking questions, listening to the client's responses, and delivering your entrée all compete for the same portion of time. This is a key reason why planning the meeting is so useful, because you are giving thought to how best to use limited minutes with the client. So planning questions and developing your entrée must go hand in hand.

Determine what actions might follow the sales call. Defining next steps is a critically important aspect of a successful sales call. It took me a while to figure this out. I often struggled to come up with a good entrée for the subsequent meeting with a client. Then I learned that this was best done with the client's input near the close of the call.

Besides establishing the basis for the next sales call, this approach also enables you to better gauge the client's commitment to continuing the conversation. If you can't get agreement (and specific commitment) to a follow-up meeting, then that strongly suggests that the client isn't all that interested. It may be better to move on to better sales prospects.

In planning your sales call, it's a good idea to come up with some possible follow-up actions or reasons for a subsequent meeting. Then you're better positioned to suggest next steps than in trying to come up with something on the fly.

Whether it's making sales calls, preparing proposals, or executing projects, it's always better to plan the work before you start. Sure, you may be able to get by without it, but you'll never be as good as you could be had you planned it in advance. Time in front of a prospective client is too valuable to leave it to spontaneity. Have a plan instead.

Are You Clear on Project Goals?

Project goals define what the project should achieve—in other words, what the desired end results are. This means going beyond simply completing a scope of work on budget and on schedule. Project goals should define how the finished project will satisfy the client’s needs and priorities. Effective goals also encompass both the tangible and intangible positive results of your work.

Simple enough? Unfortunately, project goals are not always clear between the client and the project manager. Many PMs are prone to focus more on tasks than outcomes. This is evident in project plans that amount to little more than task lists with associated budgets and schedules. To go further, the PM should assume responsibility for the following actions:

Define priorities. Meet with the client and other key stakeholders to identify both their (1) vision of the desired end result and (2) what outcomes are most important. Project goals should reflect the client's priorities, not what's important to the PM and the project team. These client-centered goals help keep the project on track when various technical and logistical issues threaten to distract the team.

Achieve goal alignment among key stakeholders. Of course, it's important that all parties have a shared vision for the project and its desired outcomes. The PM should confirm that there is agreement on project goals among members of the client organization and other key stakeholders. If alignment is lacking, you should try to facilitate agreement on goals among the parties critical to the project's success before proceeding further.

Communicate goals to the project team. A common mistake is to communicate only task assignments to the team. To encourage better performance and coordination, it's important that all team members understand overriding project goals. This enables them to see how their roles fit into the big picture, to better support other team members, and to identify opportunities to add value for the client.

Gain endorsement. Leveraging project goals to achieve success involves more than simply communicating them and getting agreement. There must also be a shared commitment to work together towards achieving the desired outcomes. Gaining endorsement means getting formal or informal commitment from project participants and stakeholders to fulfill their various project responsibilities.